Cameco Corp. (CCJ)

Company website 2020 Financial Report Stock Analysis 2020 Sustainability Report

9^%

Of World Uranium Production

Cameco accounts for 9% of world uranium production, 3rd largest producer in the world

Million Pounds

Licensed capacity to produce >53 million pounds of uranium annually in Canada and Kazakhstan

33.1^%

Reduction

in scope 1 and 2 emissions combined since 2017. That’s 137,000 tonnes of CO2e reduced

View Our Analysis

The Path to Drawdown: Nuclear

Addressing climate change and remaining below 1.5ºC of global warming compared to pre-industrial levels means that the world’s electricity source needs to switch from fossil fuels to 100% emissions-free sources by 2050. Nuclear power needs to be a significant component in the energy mix of that decarbonized future.

Extremely powerful and efficient in generating electricity, nuclear power has reduced CO2 emissions by over 60 gigatonnes over the last five decades -- equivalent to nearly 2 years’ worth of global energy-related emissions. Unlike solar and wind, electric generation from nuclear power is stable. The cost of building new plants is still very high, but once built, the energy is relatively inexpensive. With Generation III reactors on the horizon, nuclear power is becoming safer, cheaper, and more efficient.

Nuclear power accounts for 10.5% of global electricity generation today. To be on a path to remain under 1.5C° of warming, nuclear power needs to grow mildly in the next three decades:

<::marker> 6,093 TWh of nuclear electricity generated in 2018
<::marker> 6,245.3 TWh needed by 2050

CAGR of 0.08% from 2018-2050

About

Cameco Corporation (stock ticker: CCJ) is the world’s largest publicly traded uranium company. Headquartered in Saskatoon, Saskatchewan, Canada, it owns uranium mines in Canada, United States, and Kazakhstan, and not-yet developed uranium deposits in Australia. They have been traditionally focused on uranium production, fuel refinement and manufacturing, but more recently have been expanding into uranium enrichment.

CCJ's Role in Drawdown

The IEA estimates (p. 198) that getting to net zero emissions by 2050 would mean expanding nuclear power generation capacity from the 2020 baseline level of 415 GW to 515 GW by 2030, and to 812 GW by 2050. CCJ produced a total of 4,754 tonnes of uranium in 2019, accounting for about 9% of global production. According to our rough calculations, this is enough to produce 27.5 GW of nuclear energy. To maintain their 9% market share of global uranium production, CCJ would have to produce 8,005 tonnes of uranium by 2030, and 12,622 tonnes by 2050.

To achieve this type of growth, CCJ would need a rate of annual growth of about 2.18% between now and 2030, and 2.3% between 2030 and 2050. Unfortunately, CCJ’s uranium production has declined over recent years, falling by 3.62% annually between 2017 and 2020. This reduction was because of production suspension at one of its largest mines in Canada and slowdown in production due to COVID-19. Since the prospect of their production rebounding is unclear, hitting the target necessary to maintain its market share in the energy mix that IEA envisions for 2030 and 2050 will be difficult.

CCJ: What We Like

Cameco has been reducing GHG emissions consistently over the last four years:

<::marker> Direct emissions (scope 1) has fallen year-on-year by 10.07% between 2017 and 2019
<::marker> Indirect emissions (scope 2) has declined by 13.9% each year in the same period

In addition to curbing GHG emissions, Cameco predominantly uses mining techniques that produce much less waste compared to the open pit mining method. In particular, the in situ recovery, used at Cameco’s mine in Kazakhstan, is a process by which deep uranium deposits are mined from aboveground by pumping mining solutions underground to dissolve the uranium and collect it using a system of wells. This process limits rock and mineral waste to a minimum.

In the last decade, particularly following the 2011 Fukushima Daiichi nuclear disaster in Japan, Cameco has been reviewing (p. 1) its mining and processing operations to assess risks arising from earthquakes, floods, fire, and extreme weather.

What We Want to See Improve

Report Scope 3 Emissions

We applaud Cemaco for tracking and reducing their scope 1 and 2 emissions. But for investors to transparently assess Cameco’s role in bringing about a decarbonized energy system, they need to track their scope 3 emissions.

Set Clear Emissions Goals

On top of tracking scope 3 emissions, we want to see Cameco setting clear and bold targets for reducing overall emissions. Given that their emissions have been declining, we are confident that they can commit to continuing to reduce emissions toward net zero by, for example, the end of the decade.

Switch to Renewable Energy Consumption

While Cameco has consumed steadily less energy over the last several years ( 9.88% annual reduction), this energy consumption is purely non-renewable (p. 13). As a key company in the expansion of clean energy, we would like to see Cameco becoming a role model by switching the energy they consume to be based on renewable sources.

Related Nuclear Energy Stocks in the Climate Index

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Allocated	Company	Description
0.61%	Cameco Corp. (CCJ)	Cameco is one of the largest uranium producers in the world. Uranium is the metal used in generating nuclear power, an important clean energy source
0.05%	Centrus Energy Corp. (LEU)	Centrus sells low-enriched uranium and technical solutions to the nuclear power industry in the US. Nuclear power is a key part of the future energy mix
0.05%	Uranium Energy Corp. (UEC)	UEC explores, mines and processes uranium through in-situ recovery mining. Uranium is needed for nuclear energy, a key part of a zero-emission energy mix
0.03%	Ur-Energy Inc. (URG)	Ur-Energy identifies, acquires, explores, and processes uranium in the US. Nuclear power is a key element in the decarbonized energy mix
0.02%	Lightbridge Corp. (LTBR)	Lightbridge Corporation makes an all-metal fuel for nuclear reactors. Nuclear power is a key part of a zero-emissions energy mix